Most packages don’t have significant defects, and even when they do, the criteria vary depending on whether the mortgage was a purchase loan or a refi.

Another limiting factor is the Statute of Limitations in your particular state.

With regards to class action lawsuits, the most recent, successful, large-scale suit was against Ameriquest. This was a company where “business as usual” included some of the most depraved practices I’ve ever seen.

In that particular suit, how much did the “victorious” homeowners get? $675.67.

Perhaps there was a time when you could go to OCC and file a complaint and they’d actually respond, but that was before my time.

Or, if you’re “lucky” enough to live in an activist state, you can often submit the file to your state’s AG office and they’ll forward it on to the appropriate regulatory agency. However, there aren’t very many good state-run reg divisions, and of course, good or bad, they’re all swamped… mostly with files from people who have no legitimate claim whatsoever.

Yes, violations can often be used as leverage to get a good workout, however this is usually unnecessary in today’s servicing climate… AND, if you know how to work the system.

I wouldn’t disagree with that, but what I envisioned was the attorney reviewing loan docs for particular issues, and then taking only those cases where they saw defects that had a clear remedy, possibly including attorney fees. Again I’m not familiar with that area of the law, but it wouldn’t surprise me that there are technical defects in paperwork that can get banks into big trouble.

When I would have someone (like the person who caused me to write the stated income post) approach me to say “I need a stated income loan”…I’d ask why. I think most people could tell it wasn’t my cup o tea (and so they would go elsewhere)… borrowers could overstate income on their application and get a slightly lower rate than if they had left the income portion blank and gone NIV. If there was a reason for going stated, I would tell them why I preferred NIV… but they usually wanted the lower rate and had no qualms about lying about their income.

In hindsight, I didn’t offer stated or NIV products. When a borrower would come to me to get preapproved, they would be qualified “full doc”. If they all ready had a written p&s and their income didn’t fit it, they would need the credit scores and assets to go NIV (unless they had the income to go stated).

I think some borrowers felt they could rob Peter to pay Paul (or however that saying goes)…but it catches up to you…obviously.

Many consumers do not treat their finances or obtaining a mortgage with the respect and “duty” that it deserves. If they’re going to find any “bad actor” who will gladly shove them into a product regardless of circumstances, they’ll find it.

Then how do we respond when loan originators out there continue to say: “Hey, it’s not my decision to make. I provide the loan products, if they want the keys to the house, it’s up to them. They had all the documents to read.”

How do we balance higher duties owed to the consumer at the retail origination level along with respect for the consumer’s autonomy?

We could do a whole post on stated but it’s almost pointless now…I did write one about a year ago at Mortgage Porter about why I don’t like them. A first time home-buyer had contacted me wanting a stated income loan for income they anticpated they would make in the future! Not “now” income and not 2 years of averaged income based on what they report to the IRS. “Let’s pretend we’ll make this income on day” income…and use it to buy a house.

I preferred NIV where borrowers did not have to lie/over-state income on their application. The underwriter made the decision based on credit and assets if the loan made sense but the weight was off the borrower. I’ve maybe done just a handful of those loans in my 8 year career too.

I wonder how many stated/niv were done because LO’s were not able to read tax returns? I did have one contact me once wanting to learn how to calculate income now that she could no longer rely on stated. I was sick. How many people paid extra (even if they qualified full doc) and didn’t have a choice–their mistake was using an unqualified LO.

Someone earlier commented (on an another post) that borrowers who did stated income loans probably didn’t understand that they were “overstating” and what they were doing…I have a hard time with that. When you’re signing legal documents and you know you’re qualifying for a mortgage that’s based on your income which is plumped well above what you make? I don’t buy it. Somewhere in a corner of their brain, they knew something didn’t make sense…but they wanted the keys to the house.

Hmmm.

There are still a few “subprime” lenders that are offering stated–but rates are not attractive.

I’ve been told by attorneys that working the “consumer protection laws” market is tough because your customers often don’t have lots of money to put down on retainer. Maybe if there’s a class action lawsuit, the law firm could strike gold, but that money takes years to earn, so capital is required to pursue large lawsuits.

Sandy says NODs are up to 75 in Snohomish County. That’s 75 possible clients for Snohomish County area attorneys.

I’m wondering if all those who overstated their income are not necessarily in denial or stalling on contacting their lender. Maybe they don’t want to admit to taking part in what happened at origination.